A senior analyst in the legislative branch of state government is advising against over-reacting, but overall state tax revenues took a nose dive in September.
“It’s too early to start looking at things as poor, but the next couple of months will tell us whether this is a new trend or if this was just one month of numerous bad things happening,” says Jeff Robinson, a financial analyst who works in the Legislative Services Agency.
Net state tax receipts in September were almost five percent below the revenue collected in September of last year.
“September on the surface was a pretty poor month with declines in all of our major tax revenue sources,” Robinson says.
Consumer spending at the national level is inching up, but Iowa sales and use tax collections were down nearly six percent in September.
“The expectation for the entire fiscal year is that it will be up five percent, so that’s a major cause of concern,” Robinson says.
Personal income tax payments to the state were down almost three percent.
“One month doesn’t necessarily make a trend and a bad September really pulled down the growth for the year,” Robinson says.
The current state fiscal year started July 1. Cash receipts for the state increased a little less than one percent in the first quarter. That’s far below expectations.
“Personal income tax at four percent growth…through the first three months is below the 6.8 percent growth that we’re expecting,” Robinson says. “The receipts in September were particularly poor.”
Robinson is keeping an eye on the relationship between state income tax payments and state sales and use tax receipts. The key question? Why is growth in what Iowans are earning — seen in the growth of income tax payments to the state — not translating into more spending, which can be tracked by monitoring the taxes Iowans pay when buying goods and services.